Contract expense workflow

 

Shows the expense recognition workflow.

An expense is a cost incurred to obtain or fulfill a contract with a customer. The ASC 606 accounting rules require you to amortize contract acquisition expenses over the contract term.

When you add an expense line to a contract, you enter dates, an amount, and specify an expense template. The expense template defines the rules for how to schedule the expense. Intacct then generates an expense schedule based on the defined criteria.

You can post the expense manually or Intacct can post it automatically on the scheduled posting date, depending on the expense template settings. The expense recognition posting process picks up the expense schedule amounts as of the given date. It creates a journal entry in the applicable expense journal.

Per you business process, you can then reconcile the Contracts subledger to the General Ledger. The Contracts subledger reports can show the journal balances for the Expense accrual, Deferred expense, and Recognized expense values.

The expense recognition process is generally the same. When you post the expense, you'll post the expense to journal 1 and then post to journal 2. When you reconcile, you'll need to make sure you are using the values for the correct expense journal when running the reports.